Ignazio Visco, Italy’s central bank chief, is having to fend off criticism of his oversight of the country’s banks as prime minister Paolo Gentiloni considers whether to back him for a second term in the €450,000-a-year job.
Mr Visco’s stint at the Bank of Italy expires in November, posing a political dilemma for Mr Gentiloni and his centre-left Democratic party heading into a general election campaign in early 2018.
Mr Visco is considered a strong contender for a further six-year term but debate over his reappointment is increasing as the deadline for a decision draws closer. He has been a lightning rod for attacks from Italy’s vocal populist opposition, which could be hard for the PD to counter in next year’s election.
Critics say he failed properly to supervise Italy’s most troubled financial institutions, leading to a round of multibillion-euro bailouts and a loss in confidence in Italian banks among investors as well as the general public.
“We cannot reconfirm a person that is best described as the ‘Attila’ of savers: no grass grows where he has stepped,” says Elio Lannutti, the honorary president of Adusbef, a consumer group for financial services customers.
Mr Lannutti has launched a petition — together with lawmakers for the opposition Five Star Movement — to stop Mr Visco’s reappointment. “In six years, he has only made disasters. We cannot allow the principle that those who make mistakes don’t pay for them, and actually get rewarded,” he said.
Supporters of Mr Visco believe he is being unfairly blamed for the country’s banking woes and say his reappointment would ensure continuity at a time of political uncertainty.
Italy’s better than expected economic performance this year — including a brighter outlook for the banks — has also taken some heat off Mr Visco.
Among those often mentioned as potential replacements are Lucrezia Reichlin, an economist at the London Business School; Andrea Enria, chairman of the European Banking Authority; and Ignazio Angeloni, a member of the European Central Bank’s supervisory board.
Mr Gentiloni and Sergio Mattarella, Italy’s president who will have the final word on the appointment, are known for their low-key styles and risk-averse approaches, which might argue for Mr Visco to stay on.
The prime minister’s office said this month that he had “unconditional confidence” in the top ranks of Bank of Italy, after it emerged that prosecutors in Rome had opened an investigation into the Bank of Italy’s handling of the crisis at Veneto Banca, one of the most troubled banks that was shut down in June.
“For the time being Visco is still well-positioned to be reappointed, and he will stay so unless something very compromising for him emerges from the investigations on the meltdown of Veneto Banca — or possibly other banks as well,” says Mariella Palazzolo, an analyst at Telos in Rome.
This month the ECB fined Banca Popolare di Vicenza, also declared insolvent in June as Italy grappled to solve its banking crisis, €11.2m for regulatory breaches dating to 2014. At the time the Bank of Italy was closely involved in overseeing the bank.
Ms Palazzolo points out that replacing Mr Visco with a Bank of Italy insider — some have pointed to Fabio Panetta or Salvatore Rossi as contenders — would do little to defuse the political criticism, while picking an outsider for the job, which has rarely happened, would carry its own risks.
“The real issue at stake here is the degree of independence of the Bank of Italy, which is best safeguarded if its governor is appointed from within its ranks,” Ms Palazzolo says.
Matteo Renzi, the former prime minister and PD leader, frequently clashed with Mr Visco. He wrote in a book published in June that his government made a “mistake” in putting too much trust in the Bank of Italy and had “paid for it very dearly” later.
“Renzi wants Visco’s scalp, and needs to prove that he is still powerful, so this is very significant politically,” says Francesco Galietti, an analyst at PolicySonar in Rome.
Last week, in a radio interview, Mr Renzi declined to endorse Mr Visco for another term but did not rule it out. “I hope and believe that the government and the political forces will do everything so that the choice is worthy of the duties of the Bank of Italy,” Mr Renzi said.
The battle for Italy’s central bank governorship can sometimes surprise. In 2011, Mr Visco himself benefited as he edged out the two leading candidates, Vittorio Grilli and Fabrizio Saccomanni, to replace Mario Draghi following his appointment as ECB president.
Dark horse candidates this time could include Pier Carlo Padoan, the finance minister; Lorenzo Bini-Smaghi, the chairman of Société Générale; and Marco Fortis, a professor at Milan’s Catholic university, who is close to Mr Renzi.
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